Key Takeaways:
AirAsia agreed to purchase 150 Airbus A220 jets, the largest single order in the aircraft program’s history, providing a critical boost to the unprofitable jetliner and securing thousands of Canadian aerospace jobs.
"The agreement between Airbus and AirAsia is the largest order of Canadian aircraft in history," Canadian Prime Minister Mark Carney said in a statement. "For thousands of engineers, electricians, steel welders, and IT specialists, it will mean high-paying and exciting work to build a remarkable aircraft."
The landmark deal, announced Wednesday at Airbus’s assembly plant in Mirabel, Quebec, is for the A220-300 model. The aircraft will be powered by Pratt & Whitney GTF™ engines, and the purchase includes a 12-year engine maintenance agreement with the RTX subsidiary. Deliveries are slated to begin in 2028.
For Airbus, the multibillion-dollar order provides a crucial lifeline to a program that has yet to turn a profit since its acquisition from Bombardier in 2018. For AirAsia, the fuel-efficient A220 offers a strategic tool to combat rising fuel costs and economically serve thinner routes in Southeast Asia currently unviable for its larger A320-family fleet.
The A220 program has been a commercial challenge for Airbus. The company currently builds seven to eight of the jets per month across its facilities in Mirabel and Mobile, Alabama — well below the 14-per-month rate analysts estimate is needed to break even. This new order provides significant momentum toward that goal.
The deal is also a major win for Quebec's aerospace sector. The provincial government, which holds a 25% stake in the program alongside Airbus's 75% share, invested US$1 billion to keep the original CSeries program solvent before the Airbus takeover. The order is expected to be partly financed by Export Development Canada, further cementing the project's national importance.
The purchase marks AirAsia’s first acquisition of the A220 type, which seats between 110 and 149 passengers. The Malaysian low-cost carrier has seen its stock fall nearly 40% since the start of the recent US-Iran conflict, as the airline carries no fuel hedges and is exposed to volatile energy prices.
The A220’s Pratt & Whitney PW1500G engines offer significantly lower per-seat operating costs, providing a direct answer to margin pressure on routes where its fleet of roughly 250 A320-family jets is too large to operate profitably. "We want to go to places where the A320 is just too big,” AirAsia co-founder Tony Fernandes has previously stated.
This article is for informational purposes only and does not constitute investment advice.
